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Milton Friedman on Energy and oil

The current oil crisis has not been produced by the oil companies. It is a result of governmental mismanagement exacerbated by the Mideast war. The price of natural gas at the wellhead has been held down for years by government edict. Since Aug. 15, 1971, the price of retail gasoline and of fuel oil has been held down by the successive phases. The result has been to encourage consumption and discourage both current production and the expansion of capacity. It took the Mideast war to bring these evil effects of price-fixing to a boil.

Context. From a Newsweek column written about a month into the Arab oil embargo of 1973, while retail gasoline and fuel oil prices were still held down under the price controls President Nixon began on August 15, 1971. “The successive phases” are the phases of the Nixon price controls that followed the 1971 freeze.

Why Some Prices Should Rise
Column, 1973, Newsweek (November 19, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, November 29, 1973, p. 38775, introduced by Representative John H. Rousselot of California, who gives it as “an article which appeared in the November 19, 1973, issue of Newsweek”, Congressional Record, November 29, 1973, p. 38775
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Milton Friedman, “Why Some Prices Should Rise” (Newsweek (November 19, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, November 29, 1973, p. 38775, introduced by Representative John H. Rousselot of California, who gives it as “an article which appeared in the November 19, 1973, issue of Newsweek”, 1973), Congressional Record, November 29, 1973, p. 38775. https://miltonfriedman.org/quotes/oil-crisis-governmental-mismanagement-price-fixing-1973

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  1. The answer to “Why now?” is straightforward—yet I know from bitter experience how hard it is to persuade anyone other than an economist that so simple an answer can be correct. Nineteen seventy-three is different from other peacetime years because, for the first time since World War II, the U.S. has had extensive price and wage controls. The key to today’s shortages is the price freeze ordered by President Nixon on Aug. 15, 1971.

    Context. From a Newsweek column written during the 1973 oil shortages, nine weeks into the Arab oil embargo and more than two years after President Nixon froze wages and prices on August 15, 1971.

    Why Now?
    Column, 1973, Newsweek (December 31, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, January 24, 1974, p. 801, introduced by Representative John M. Ashbrook, who gives the issue as “the December 31, 1973 issue of Newsweek”, and reprinted again the same day at pp. 807 to 808 by Representative Earl F. Landgrebe, Congressional Record, January 24, 1974, p. 801
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  2. The most effective way to cut consumption and encourage production is simply to let the prices of oil products rise to whatever level it takes to clear the market. The higher prices would give each of the 210 million residents of the U.S. a direct incentive to economize on oil, to find substitutes for oil, to increase the supply of oil.

    Context. From a Newsweek column written about a month into the Arab oil embargo of 1973, while retail gasoline and fuel oil prices were still held down under the price controls President Nixon began on August 15, 1971. Later in the column he adds that what is called for is higher prices for oil products “relative to other products—not general inflation.”

    Why Some Prices Should Rise
    Column, 1973, Newsweek (November 19, 1973); reprinted in full in the Congressional Record, Extensions of Remarks, November 29, 1973, p. 38775, introduced by Representative John H. Rousselot of California, who gives it as “an article which appeared in the November 19, 1973, issue of Newsweek”, Congressional Record, November 29, 1973, p. 38775
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  3. The subtle and sophisticated people who fill the newspaper columns and the airwaves with such silly explanations of the gasoline shortage seem never to have asked themselves the obvious question: why is it that for a century and more before 1971, there were no energy crises, no gasoline shortages, no problems about fuel oil—except during World War II?

    Context. From a June 1979 Newsweek column, written during the second oil-shock gasoline lines, arguing that the shortage was caused by federal price controls on crude oil and petroleum products in force since August 1971.

    Blaming the Obstetrician
    Column, 1979, Newsweek (June 4, 1979); reprinted in the Congressional Record, Extensions of Remarks, pp. 14007 to 14008, introduced by Representative G. William Whitehurst of Virginia. The running head reads June 7, 1979, which is the issue; the entry’s own dateline reads Wednesday, June 6, 1979, which is when he spoke., Congressional Record, June 7, 1979, p. 14008
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